The unfavorable economic environment has affected demand only slightly for frozen processed food in Italy. Following a marginal decline in 2009, the category recorded positive current value growth of 3% and 2%, respectively, in 2010 and 2011. However, volume sales have fluctuated somewhat in recent years, registering a 3% increase in 2010 followed by flat sales in 2011.
Frozen food is now regarded more highly in Italy than previously, seen by consumers as almost as healthy as fresh food but more practical and often more affordable. Per capita consumption of frozen food (retail volume) in 2011 in Italy was 10kg, compared to the Western European average of 13kg, indicating that there is still considerable potential to increase penetration. Overall, the main target audience for frozen food manufacturers in Italy is young families who are concerned about convenience as they are unable to dedicate much time to cooking. Interestingly, 2011 saw an increasing manufacturer focus on making frozen food as convenient as possible in order to compete with other packaged food categories, while retailers maintained their aggressive promotional activities.
Pizza: Value for money
The most dynamic category – frozen pizza – has also been a focus of innovation. The leading manufacturer, Nestlé, launched two major products in late 2010 – Funny Pizza, a simple pizza in terms of ingredients and with no crust, targeted specifically at children as they often leave the crust on the plate, and five variants of Pizza Ricca, a classic size pizza, with innovative premium toppings, cooked in a stone oven and with a fragrant thin and crunchy base. The toppings include combinations such as tuna, cheese and tomato (Tonno Sfizioso), cooked ham and chilli pepper and speck, cheese and onion. Bofrost, a direct selling frozen products company, expanded its premium range of frozen pizza in 2010, introducing two variants – pizza with a bresaola and rocket salad topping (a frozen pizza with “fresh” and low-fat toppings) and Schiacciata Mediterranea, a thin pizza from the south of Italy, made using a traditional Mediterranean recipe, including the well-known red onions from the southern village of Tropea, enriched with sun-dried tomatoes and black olives. Innovations in 2012 have focused on health lines, conveying the message that frozen pizza offerings could offer something more than convenience.
One key example has been the introduction in April 2012 of Focaccia senza glutine surgelata al rosmarino from Gruppo Dr Schär. The new line is gluten-free and targets consumers who, while suffering from gluten intolerance, still want to enjoy the convenience and indulgence of traditional frozen pizza offerings. Frozen pizza was by far the best performing category in 2011, registering growth of 9% in current value terms. Retail value sales totaled €347 million. The penetration of frozen pizza among Italian households has increased significantly since 2009 due to its position as offering value for money as a ready meal. Sales have also been driven by innovations in the category, such as mini-pizzas from Cameo (Speedy-Pizza) and Findus (Pizza-Sofficini), as well as new toppings, for example from Cameo’s Pizza Ristorante and Buitoni’s Pizza Ricca lines, which have aimed to increase value sales through a premium positioning.
Ready meals: Private label challenges growth
Despite its weak sales performance, new frozen ready meal lines have been introduced between 2010 and 2012. Frozen processed food manufacturer Findus, currently owned by Birds Eye and Compagnia Italiana Surgelati, has been fairly active in terms of innovation. The company widened its Quattro Salti in Padella line in 2011, launching Melanzane Sfiziose. This line consists of an aubergine-based side dish, enriched with mozzarella cheese and tomatoes, and the pasta dish Potatoes Gnocchi, enriched with a sophisticated sauce of clams and porcini mushrooms. Interestingly, foreign fast food concepts and vegetable combinations are also proving quite popular among Italian frozen ready meal manufacturers. Plusfood Italia, for instance, introduced in March 2012 Speedy Gringos. Marketed as a convenient and fast ready meal solution, the new line features a new range of breaded Texas-style chicken fingers.
Local ready meal manufacturer Riso Scotti, for its part, introduced in January 2012 Piatto Unico Branzino Riso e Verdure. The new line combines fish (branzino), rice (riso) and vegetable ingredients (verdure) in a single meal solution. Available in a 450g format, it is being sold through supermarkets and hypermarkets and retails at around €4.30 per pack. Retail value sales of frozen ready meals rose by 1% in 2011, in actual terms totaling €346 million. Sales have been hampered by the general trading down trend that has characterized Italian consumer spending since 2008. Economic woes and tighter household budgets have not seen a response from manufacturers in terms of reducing the unit prices of frozen ready meals. Branded frozen ready meals have seen strong competition from private label, while retailers have discounted prices. A lack of clarity in the display of products has also led to some confusion among Italian consumers with regard to pricing in the category, thus hampering overall demand.
Vegetables: Quality is king
Frozen processed vegetables registered positive growth in both 2010 (3.4%) and 2011 (2.1%) in retail value terms, while in volume terms sales declined in 2011. In actual terms, retail value sales totaled €808 million in 2011. Average unit price rose in 2011 as key brands invested in innovative and high-quality products in an attempt to slow the advance of private label. The best-sellers in frozen processed vegetables are green vegetables, with peas and spinach leading sales, whereas mushrooms, cauliflower and carrots continue to lack appeal. A niche category of note is frozen processed fruits, which is developing steadily in the Italian market. Alongside traditional frozen fruits, such as berries, manufacturers are introducing different kinds of fruit. Another increasingly significant niche is frozen herbs, where basil and parsley are the best sellers. In actual terms, retail value sales of frozen parsley and basil totaled €14 million in 2011, 9% up on the previous year.
Coated fish – the best performing type
Frozen processed fish/seafood posted marginal growth in value terms but declines in volume terms in 2010 and 2011, because of the low purchase frequency of such products. In actual terms, retail value sales totaled €800 million in 2011, 1% up on the previous year. Private label in the frozen processed fish/seafood category is gaining ground among middle-income Italian consumers. In response, key manufacturers have focused on high quality and the diversification of their ranges in order to differentiate their products and achieve higher margins. Coated fish was the best performing type, followed by seafood, which is still a fairly new category. Research suggests that the latter holds significant potential for the development of innovative recipes and strong added value.
Future direction
Frozen processed food sales are forecast to rise by just 4% in constant retail value terms over the 2011-2016 period. Typical consumers of frozen products in Italy will continue to be families with limited time to devote to cooking, singles and young people looking for convenience, as well as older people concerned with health issues. The significant importance of private label offerings in frozen processed food, which accounted for around 30% of total retail value in 2011, will in the future slow value growth and push manufacturers to step up innovation. Changes in consumer lifestyles have favored the introduction of frozen processed food as an important part of the daily diets of Italian families. Frozen processed food producers are therefore expected to invest heavily in new product development and the introduction of healthier products in the coming years in order to counteract the competition posed by cheaper private label products.
Overall, this scenario might lead to increased polarization, favoring premium and private label lines at the expense of medium quality or secondary brands that do not offer either top quality or low prices. The frozen processed vegetables category is predicted to be one of the most dynamic categories, with both manufacturers and private label competing to offer top-quality products. A wider range of vegetable combinations, and possibly the introduction of provenance labeling, is likely to be seen over the short term. Similarly, the current health focus in frozen processed fish/seafood will continue to drive most of the new developments that will be introduced in the category over the next five years. Interestingly, there is consensus that the introduction of a wider range of fish breeds, including exotic ones, might increase the appeal of the category among younger consumers in urban areas. Similarly, widening the range of low-fat pizzas might prove an effective strategy to attract weight-conscious consumers to the category. The calorie content of frozen meal solutions has been one key obstacle to its volume expansion in recent years, hence the need to introduce new ranges offering the indulgence of traditional pizza variants but with a significant lower calorie content.